Posted On: February 27, 2007

No Spin Zone - "Spinners" Case Tossed on Summary Judgment

<%media(20070227-Rimmax II.pdf|Rimmax Wheels LLC v. RC Components, Inc., C.A. No. 06-029-SLR (D. Del. Feb. 21, 2007))%>
Admittedly, this case is pretty much a run of the mill contract dispute. Rimmax ordered some �spinners� from defendant and appears to have paid for part of the order up front. Plaintiff sent defendant a supply agreement, but it was never signed. Defendant produced the spinners to the extent plaintiffs had paid, but refused to produce any more spinners unless plaintiffs paid more money. Defendant claimed that he thought the original sums paid to plaintiff were for all 54 spinners, not just the 34 produced by defendant. Judge Robinson granted summary judgment to defendant on all claims and dismissed the suit. As to the contract claim, the Court found that plaintiff brought forth insufficient evidence to show that it had paid in full for 54 sets of spinners rather than the 34 sets produced. So, the Court enforced the parties� oral agreement to the extent of the part performance but no further. The Court also ruled against plaintiffs on their breach of confidentiality and interference with contractual relations claims for lack of evidence.

So why do I find this case so interesting? I guess I�m just fascinated by spinners. The car/motorcycle stops, but the spinning rims create the illusion of continued motion. Really, how did the inventor come up with this? Perhaps it is the compete lack of utility (and concomitant high level of creativity) that has created my fascination. So I digress�

I was also intrigued by the reference in this decision to utility and design patents that plaintiffs alleged to own. After doing a search at the PTO today, I was surprised to find that Rimmax�s first utility patent on spinners was issued TODAY (dumb luck or fate?) as <%media(20070227-pat7182408.pdf|U.S. Pat. No. 7,182,408)%>. They also hold several design patents. (Actually, none of these patents have been assigned to Rimmax, but instead are held by the inventors individually.) Given the allegations plaintiffs made about how defendant had stolen their intellectual property, I�ll wonder aloud whether a patent infringement suit(s) might follow in the near future?

Posted On: February 23, 2007

Make Sure to Timely Disclose Those Prior Art References!

In <%media(20070223-05-132.pdf|Bridgestone Sports Co. Ltd. v. Achushnet Co)%>., the plaintiff moved to preclude defendant's use of prior art references that were disclosed four months after the deadline for the defendants to provide their invalidity defenses. C.A. No. 05-132 (D. Del. Feb. 15, 2007) (Farnan, J.). The defendants had provided 198 pages of invalidity contentions on 7 patents-at-issue. None of the prior art references disclosed after the deadline were contained in the original contentions. In deciding whether to exclude the evidence pursuant to Fed. R. Civ. P. 37, the Court turned to the Third Circuit case of Meyers v. Pennypack Woods Home Ownership Ass'n, 559 F.2d 894 (3d Cir. 1977). That case found that the factors relevant to such an inquiry include: (1) the prejudice or surprise to a party against whom the evidence is offered; (2) the ability of the injured party to cure the prejudice; (3) the likelihood of disruption to the trial schedule; (4) bad faith or willfulness involved in not complying with the disclosure rules; and (5) the importance of the evidence to the party offering it.

Among many reasons for deciding to exclude the evidence, Judge Farnan noted that the parties in this litigation are "sophisticated business entities" who are represented by "counsel well-versed in complex patent litigation" and have brought "numerous and contentious discovery disputes" that have been more "'strategic'" in nature than substantive. Id. at 9. Furthermore, the defendants had many other references available to them such that the exclusion of these pieces would not "cripple" their invalidity case. Id. The references were also available to the defendants before the close of fact discovery and "well-before" the deadline for disclosure of invalidity defenses and references relied on. The fact that plaintiff was aware of these references furthermore did not excuse the defendant's failure to disclose. Id. at 11.

Posted On: February 23, 2007

New District of Delaware Filings

2/20: Ansell Protective Products Inc. v. Tillotson Corporation (declaratory judgment - patent action)
2/21: Entrust, Inc. v. Open Solutions Inc. (patent infringement)
2/22: Parker-Hannifin Corp. v. Seiren Co., Ltd. (patent infringement)

Posted On: February 21, 2007

Damages Decision Issues in Novozymes v. Genencor Litigation

In one of his last acts as a district judge, now-Third Circuit Judge Kent A. Jordan last week issued a post-trial damages opinion in the Novozymes v. Genencor litigation. In its decision, the Court touched on a range of subjects, including questions of standing, willfulness, and permanent injunctive relief.

Subsidiary Standing. The Court recognized that, in the absence of direct evidence of an exclusive relationship, an otherwise nonexclusive licensee might have standing to pursue an infringement action. But where, as here, the license agreement contained a covenant not to sue and a grant of a "non-exclusive" license, the written agreement trumped any collateral evidence of an exclusive relationship.

Willful Infringement. The Court also found that Defendant Genencor willfully infringed Novozymes's patent by continuing to sell its competing product after receiving notice of allowance of Novozymes's claims.

"[N]ot only did Genencor continue to manufacture and sell Spezyme Ethyl, it also applied for its own patent claiming what appears to be, in essence, the same technology. Taken together, Genencor's behavior suggests that it deliberately continued to infringe Novozymes's claims on technology that Genencor itself believed was patentable." (slip op. at 31)

Genencor's decision to wait to pull its product from the market until after a decision in the first phase of trial also weighed on the Court's willfulness finding: "Genencor failed to exercise due care when it chose to continue making and selling the accused product until the end of the liability phase of this trial." (slip op. at 32)

Permanent Injunctive Relief. The Court also found that, because the parties are direct competitors, permanent injunctive relief is warranted.

"[T]he statutory right to exclude represents a benefit that, under these circumstances, cannot be equated by an award of cash. These are head-to-head competitors, and Novozymes has a right, granted by Congress, not to assist its rival with the use of proprietary technology." (slip op. at 37)

Interestingly, the Court noted that this legal-remedy analysis would apply regardless of whether Novozymes was awarded a reasonable royalty or lost profits.

<%media(20070221-05-160a.pdf|Novozymes A/S v. Genencor Int'l Inc.)%>, C.A. No. 05-160-KAJ (D. Del. Feb. 16, 2007) (Jordan, J.).

Posted On: February 19, 2007

New District of Delaware Filings

2/12: Purdue Pharma L.P, The P.F. Laboratories, Inc. and Purdue Pharmaceuticals L.P. v. KV Pharmaceutical Company (Patent Infringement)
2/12: Sandata Technologies, Inc. v. First Data Government Solutions, Inc. (Patent Infringement)
2/14: The Nemours Foundation v. Citroen Wolf Communications, Inc., and National Association of Pediatric Practitioners (Trademark infringement and supplemental state law claims)

Posted On: February 2, 2007

What Constitutes "Use" Under 35 U.S.C. 271(a)?

This was the question before Magistrate Judge Thynge in Inline's Motion for Summary Judgment that the defendants' conduct is an infringing "use" as defined by the statute. <%media(20070202-Inline AOL 02-272 2-1-07.pdf|Inline Connection Corp. v. AOL Time Warner Inc.)%>, C.A. Nos. 02-272, 02-477, Memo. Order (D. Del. Feb. 1, 2007) (Thynge, M.J.). The defendants argued that because they do not provide all the components of the claimed system they do not "use" the invention and therefore cannot infringe the patent-at-issue. The Court found that use only requires that the infringer: excercise control over the system and obtain beneficial use of the system. Id. at 2. Here the defendants provide hardware, instructions and customer support which constitute use under the statute. Id. at 4. "The fact that they do not own all the component parts of the system does not matter." Id. Therefore, to directly infringe a claim for a system, a party does not need to directly use each component of that system.